Mackenzie burned by Bernie Madoff (made off with your money)

[macker]

Jan. 9 (Bloomberg) -- A Canadian hedge fund operated by Mackenzie Financial Corp. invested about 20 percent of its assets with Bernard Madoff’s New York investment firm, the Globe and Mail reported.
The Mackenzie Alternative Strategies fund, run by Tremont Capital Corp., suspended redemptions and began winding down after it lost 47 percent in December, the newspaper said today. The C$19 million ($16 million) fund dropped 59 percent last year.
Mackenzie, a unit of IGM Financial Inc., wrote off the value of the money invested with Madoff after his alleged Ponzi scheme came to light, the Globe said, citing David Feather, president of Mackenzie’s fund unit.
To contact the reporter on this story: Kevin Bell in Toronto at kbell2@bloomberg.net

Unfortunately another reason to avoid mutual funds and hedge funds. Whatever happened to due diligence???

[Ozy_Flame]

I have no idea what any of that even means, except that money is used to purchase goods and services.

[SteveToms]

Originally Posted by Ozy_Flame

I have no idea what any of that even means, except that money is used to purchase goods and services.

Hookers and Blow.

[macker]

Originally Posted by Ozy_Flame

I have no idea what any of that even means, except that money is used to purchase goods and services.

Money = $50 Billion Ponzi scheme that is said to be the biggest scam of this nature in history. Just ask Kevin Bacon, Tom Cruise or Steven Spielberg who saw their Money evaporate

[Slava]

Originally Posted by macker

Unfortunately another reason to avoid mutual funds and hedge funds. Whatever happened to due diligence???

Right, because I'm sure that every individual investor on his own saw this one coming, along with the SEC and all of the other foundations and corporations that were swindled?

[SportsJunky]

Madoff needs to go to prison and be mixed in with the dangerous and scary criminals. His punishment should be daily fear of rape and assault.

[Bertuzzied]

Originally Posted by Slava

Right, because I'm sure that every individual investor on his own saw this one coming, along with the SEC and all of the other foundations and corporations that were swindled?

No kidding. the guy was the former CEO of the Nasdaq.

[macker]

Originally Posted by Slava

Right, because I'm sure that every individual investor on his own saw this one coming, along with the SEC and all of the other foundations and corporations that were swindled?

So it is not a black eye for a leading mutual fund company in Canada to put 20% of a funds holdings with a complete scam artist. I just don't see how this kind of thing happens. I hope every individual investor will see this one coming going forward and avoid companies like Mackenzie that are caught not doing proper DD. So I guess charging 3% MER's is ok as long as they can select the best Ponzi Scheme for the individual investors money. Sorry

[Slava]

I just don't understand how you expect the due diligence of a mutual fund company to find something that no one else did? I think that you are also missing the point of the MERs'...but that is a whole other discussion.

Fact is that while mutual funds are not the best option for everyone and for all of their money they were not the cause of the problem here. A lot of very smart people lost a lot of money with this scumbag. Its not like Mackenzie hired him and brought him in as a star manager for one of their funds. They were paying someone who was paying him to manage some money. They are surely responsible for that, but if the SEC and countless others couldn't see the Ponzi scheme than its obvious that Mackenzie didn't know either.

[Slava]

Here is another link that explains things a little further: http://www.globeadvisor.com/servlet/...109/RTREMONT09

I also wonder if these people weren't invested with a company like Mackenzie into this holding where they could have any recourse? Mackenzie has already been asked about covering the losses...not saying that they will, but its a glimmer of hope for those who got burned.

(btw, before someone plays this card: I don't work for Mackenzie and rarely invest through them...so I'm not spewing the company line here!)

[@theCBE]

First thing I thought read when I saw the thread title was "Wow, tsn must pay some pretty decent coin for Bob Mackenzie to play with the likes of Bernie Madoff.."

[macker]

Originally Posted by Slava

I just don't understand how you expect the due diligence of a mutual fund company to find something that no one else did? I think that you are also missing the point of the MERs'...but that is a whole other discussion.

Fact is that while mutual funds are not the best option for everyone and for all of their money they were not the cause of the problem here. A lot of very smart people lost a lot of money with this scumbag. Its not like Mackenzie hired him and brought him in as a star manager for one of their funds. They were paying someone who was paying him to manage some money. They are surely responsible for that, but if the SEC and countless others couldn't see the Ponzi scheme than its obvious that Mackenzie didn't know either.

The SEC has missed a few things recently that cause one to shake their head. How can one guy scam $50 Billion and nobody had a clue about what was going on. I think the entire system looks pretty weak in this case. As for Mackenzie it is disappointing that they would be caught in bed with a serial fraud artist like this and they should stick to their own star managers such as Peter Cundil. What were they thinking. I say just cut the fund manager right out of the picture and if you aren't able to manage your own portfolio you can now have an actively managed ETF (Beta-Pro) that would at least offer you more transparency as to what exactly you are investing in. If there is no trust in the mutual fund / hedge fund industry people will find alternative ways to make money. I guess mutual funds and hedge funds do have a place but they don't belong in my portfolio thats all.

[Slava]

Well the issue with Hedge Funds in general is that you don't know what you are investing in. They are largely covered in a shroud of secrecy and you can't get a handle on what they actually hold. Mutual Funds though are very different; you can find out what you're investing and they are actively managed as well.

Its also commonplace for companies to use their star managers as well other managers to run certain portfolios. I don't really agree with this practice, but that is another issue entirely again!

I agree that the SEC dropped the ball here, but they had investigated the guy over the years and as Bertuzzied said previously he was the former head of the Nasdaq. I think that the disappointing thing is that no one else has been pin-pointed in the investigation yet....clearly you can't pull off $50 Billion on your own!

[Hack&Lube]

Originally Posted by Slava

I just don't understand how you expect the due diligence of a mutual fund company to find something that no one else did?

There were plenty of American financial companies, funds, and organizations that said that they specifically didn't invest in Madoff's schemes because they took a look and couldn't figure out how he was getting the returns he was getting and they turned out to be right. Due dilligence is due dilligence.

[macker]

Originally Posted by Slava

Well the issue with Hedge Funds in general is that you don't know what you are investing in. They are largely covered in a shroud of secrecy and you can't get a handle on what they actually hold. Mutual Funds though are very different; you can find out what you're investing and they are actively managed as well.

Its also commonplace for companies to use their star managers as well other managers to run certain portfolios. I don't really agree with this practice, but that is another issue entirely again!

I agree that the SEC dropped the ball here, but they had investigated the guy over the years and as Bertuzzied said previously he was the former head of the Nasdaq. I think that the disappointing thing is that no one else has been pin-pointed in the investigation yet....clearly you can't pull off $50 Billion on your own!

That will change with Hedge funds as they will soon be forced to disclose what they are holding. They used to market hedge funds claiming that they would still make money when the market is going down and we all know after last year that this is definitely not the case. A lof of people are being exposed here right down the line and it all starts with the SEC. Clearly changes are needed and the SEC is like an old boys club. Not surprising with the ties between the Nasdaq and Madoff and the tech bubble and the poor performance of investment funds. The whole system needs fixing and disclosure and education to allow for greater DD is a good place to start.

[Slava]

Originally Posted by Hack&Lube

There were plenty of American financial companies, funds, and organizations that said that they specifically didn't invest in Madoff's schemes because they took a look and couldn't figure out how he was getting the returns he was getting and they turned out to be right. Due dilligence is due dilligence.

Right and I don't disagree that if you don't know what you're investing in you shouldn't be investing. There were a couple of institutions that passed on the subprime mortgages as well (for this very reason)....but the majority did not. I don't disagree that due diligence has to be completed. If Madoff were investigated and cleared a few times by the SEC though doesn't that count as due diligence? I would almost guarantee that some of the investors who lost money were running around telling everyone how amazing "their guy" was while everyone else was losing money.

Further how many people have invested in some of the guaranteed 13, 14 or 15% investments I've seen advertised for months on end now? How much due diligence are they doing? How is it that these companies are guaranteeing these outlandish rates of return when everyone else invested traditionally cannot make that promise? I'm sure that the due diligence on those projects is stellar though...

Originally Posted by macker

That will change with Hedge funds as they will soon be forced to disclose what they are holding. They used to market hedge funds claiming that they would still make money when the market is going down and we all know after last year that this is definitely not the case. A lof of people are being exposed here right down the line and it all starts with the SEC. Clearly changes are needed and the SEC is like an old boys club. Not surprising with the ties between the Nasdaq and Madoff and the tech bubble and the poor performance of investment funds. The whole system needs fixing and disclosure and education to allow for greater DD is a good place to start.

At some point people have to take responsibility for their own actions. Let me say point blank that Madoff should rot in jail for the rest of his life, and by no means do I mean that he should be off the hook. In general though people need to learn more about what they are investing in, or have someone they trust work with them on this. Clearly the SEC needs changes (and not just because of this particular case), but seriously some of the onus goes onto the investors as well.

[macker]

At some point people have to take responsibility for their own actions. Let me say point blank that Madoff should rot in jail for the rest of his life, and by no means do I mean that he should be off the hook. In general though people need to learn more about what they are investing in, or have someone they trust work with them on this. Clearly the SEC needs changes (and not just because of this particular case), but seriously some of the onus goes onto the investors as well.[/quote




I am holding Mackenzie Financial to a higher level than "individual investors". It is the only hedge fund that they have and they put 20% of it with the worst person out there....I don't know maybe I am missing something here. IGM Financial the parent company for Mackenzie was down about 4% today so I think they are pricing in a payoff of all investors that lost money due to the scheme. What you are saying about investors should have known better sounds way too much like the whole blaming a woman for getting raped. Could the victims have done things differently? Perhaps, but that doesn't mean they are to blame.

[SeeGeeWhy]

There was a bit on CBC Sunday a week ago (or so) when all of this Madoff stuff was just hitting the fan, and they interviewed a head honcho from Calgary's First Capital. He said that he was approached by Madoff to invest in the fund and said that it was way too complicated for him to figure out how the fund was going to generate the returns that Madoff was promising, so he didn't put anything into it. He said that his first rule is that if it is too complicated to understand, he doesn't invest, and that he was glad that he couldn't figure this one out even though he felt really embarassed at the time for not being able to.

So, I guess if you had the benefit of speaking directly with Madoff, you might have been able to have a hunch that something wasn't right... I am with Macker a bit in that the managers at MacKenzie probably could have worked a bit harder to understand something that they were putting 20% of their assets behind (other than a guy's reputation).

[McG]

As an investor, I was shocked to read the most recent Conde Nast Portfolio magazine article about wall street. its appalling.

hedge funds, side bets by short selling, derivatives products that these guys don't have the foggiest ideas about, basic banking rules that were ignored and willingly misused and misconstrued, and then bundled and repacked in tranches for other investors to acquire.

I simply note this...everyone is a genius in an upmarket.

[pepper24]

I think the lesson is not to avoid investments but to make sure that you diversify these investments. Don't have all your eggs in one basket especially riskier investments like hedge funds and commodities. I don't feel sorry for anyone that had 100% of their money in Enron or with Madoff. They should have known better. Pigs get slaughtered.

As for MacKenzie Financial Corp, they should have known better than having 20% of their money with one fund/firm (Madoff's firm). That's not diversification and not looking out in the best interest of their investors. That's borderline criminal in my books and only a tier down of what Madoff actually did.